Question

9. A and B commenced a business and agreed to share future profits as per the effective capital
ratio. A invests 15,000 and at the end of 8 months 5,000 more. But B invests 7,500 and at
the end of 4 months 12,500 more but withdraws 7,500 at the end of 6 months more. At the
end of the year the profit they got was 4,725. Find their shares.​

Answer 1

Answer:

Calculation of capital ratio

A

15000 invested for 8 months

so 15000*8= 120000

after 8 months capital is (15000+5000)=20000

invested for 4 months =20000*4= 80000

Total =120000+80000=200000

B

7500 invested for 4months = 7500*4= 30000

after 4months capital is (7500+12500)=20000invested for 2 months

so 20000*2=40000

After 6months capital is (20000-7500)=12500

invested for 6months

so 12500*6= 75000

Total = 30000+40000+75000=145000

Capital ratio = 200000:145000

= 40:29

A share in Profit = 4725*40/69=2739

B share in profit = 4725*29/69=1986